Trade Wars Next?

by Joe Katzman at March 7, 2003 5:03 PM

In the March 5th Winds of War, I mentioned:

"Geitner Simmons blog makes an excellent point: if America's enemies in France and elsewhere continue to make international bodies a joke due to their resentment of America, have they considered the likely cost of America reciprocating that resentment? [Full article here, recommended] It really does look more like the 1930s every day."
Bill Quick neatly illustrates one of my thoughts when I made that last comment.

These fears of a trade war aren't completely fanciful; I could certainly see this as France's next game once U.S. retaliation (carousel retaliation and others) begins to bite their oil industry and beyond.

Indeed, a long term French campaign to introduce retaliatory and anti-USA tarrifs in the EU strikes me as not only likely, but probable.

  • First of all, they need another bogeyman to keep their dream of an EU counterbalance to the USA alive.

  • Second, they're going to be under all kinds of pressure from "New Europe" due to subsidy imbalances in a much more crowded trade zone - something that was an unspoken undertone in the famous New Europe 8 Letter. There's a lot of superficial attraction to "make room" by trying to push American trade out, rather than confronting their own protected populations.

  • Finally, raising the trade walls is probably the single most effective thing France can do to create an "all of us vs. them" mentality that forces the small nations of "New Europe" to go along and reduces American influence in Europe.
    The French have defined the terms around Iraq: America's role in the world. They've defined their future role: leader of the opposing forces. They've also shown how far they're willing to take this - and the answer is everything and anything short of war. Writing recently in Forbes Magazine, historian Paul Johnson aptly described French governments' "unique mixture of shortsighted selfishness, long-term irresponsibility, impudent humbug and sheer malice." This would certainly fit the bill on all fronts.

    As for my "1930s" crack, it goes deeper than global threats and a fifth-column "peace movement" led by hard-core cadres. Recall that in the 1930s, a world in recession also did this.

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